Specifically, the objective of this study is to show how developing market enterprises might gain a competitive edge through technological advancement. The role of organizational leadership as a mediating factor in the links between innovation and competitive advantage is investigated in this study using the upper echelon theory and the power distance cultural perspective, respectively.
Specifically, information was gathered from the service sectors of two growing economies, namely India and Ghana. At two different levels, robust standard error regressions were performed. First, at the level of a given country, and then at the aggregated level for the purpose of checking for robustness.
The findings indicate that, in both India and Ghana, innovation is strongly associated with competitive advantage. To put it another way, in both instances, market innovation was found to be the most significant factor of competitive advantage. Also shown to be mediating between innovation and competitive advantage in both scenarios, both individually and collectively, was organizational leadership, which further confirms the effect of power distance and leadership role in such cultures.
Limitations and ramifications of the research
With respect to emerging markets with high power distance cultures, the current study only looks at two of them. The consequence is that the impact of leadership may be different in emerging markets with a short distance between them and their leaders.
Aiming beyond the conventional association between financial performance measurements and innovation, the current study examines the relationship between innovation and competitive advantage in the context of emerging economies, which has received insufficient attention previously. It goes on to discuss how emerging market enterprises can take advantage of power distance to gain a competitive advantage in their innovation development and execution through the use of organizational innovation leadership to achieve a competitive advantage. As the report argues, the maximal exploitation of the beneficial effect of innovation – competitive advantage – in service organizations can only be realized when executives take the initiative and follow the innovation process through to its successful conclusion and implementation.
Internationalization and technological innovation
While earlier study has looked into the relationship between innovation and international development, our current research, which is based on a sample of 335 French SMEs, has found that technological resources are the most important drivers of international development.
The ability of a corporation to activate its existing and available internal knowledge is a critical component of the innovation process. The ability of the corporation to obtain information from external sources, whether through imitation methods, license acquisition, collaborations, or the purchase of patents, is also critical to its success. Export strategies help small and medium-sized businesses improve their ability to innovate by improving their access to resources such as skilled labor.
Global activities provide direct access to commercial partners as well as international professionals in the venture capital and private equity industries. Small and medium-sized enterprises (SMEs) in Europe only account for 30 percent of total exports, with the ratio in France hovering around 16 percent. Product innovation is cited as a crucial factor in the proclivity of German enterprises to export their goods and services.
Furthermore, SMEs that operate within an industry or with suppliers who are technologically savvy have greater potential for innovation. According to research, when businesses are confined by geographical limits, their ability to innovate is likewise constrained as a result.
By expanding their reach into new markets, internationalisation offers them with the potential to boost their resources. Internal financial resources are freed up as a result of this leverage. Increasing access to external funds is also made possible through export activities, which provide easier access to new networks of potential investors who are more likely to join in innovative initiatives. As a result of their proximity, they get access to vital information about the expectations of present and potential clients. Customers are widely considered to be the most important driver of product innovation, according to recent research.
SMEs are moving in the direction of greater innovation and internationalization.
Although it is possible to adopt a variety of strategies, doing so can be extremely difficult. Small and medium-sized enterprises (SMEs) have a limited ability to innovate or internationalize since they consume a substantial amount of financial, technological, commercial, and human resources. Small enterprises, which are considered to be resource-constrained, retain their performance by a high degree of adaptability. The synergy expected as a consequence of the joint development of both innovation and internationalisation is limited by the low transferability of resources. Indeed, cultural and institutional distances can drastically reduce the transmission of skills and knowledge.
The results of our research allowed for a better adaptation of public innovation and export policies, which are separated and individually managed. The French Employment Orientation Council has identified more than 2,500 different promotion programs, mainly based on financial support, but coordination is lacking and effectiveness limited. Indeed, a study conducted by ANVAR (French organisation for the improvement of innovation in SMEs) reported that 39% of the firms that received financial support still failed. By focusing on support in codifying the existing innovations, public policy would sustain the internationalisation strategy, increase the value added and the industry production, and induce a job-creation effect.